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Investment banking/Trading jobs - description and some help [#permalink]

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19 Oct 2007, 23:40

Hi all,

I have been trying to understand about the I Banking industry and went thru loads of guides like wetfeet/vault/day in a life etc to understand more about I Banks and the kind of jobs they have. I briefly understood that broadly it can be classified as

1. M&A (including underwriting for IPO's etc)
2. Sales and Trading

I have a few queries. Request someone knowledgeable about the industry clarify the same.

1. In the Sales and Trading, I understand that there are various "desks" like fixed income, commodities, derivatives, currencies etc. I did not find any guides highlighting the differences between these though one particular guide mentioned that the culture and the skills required are vastly different for each of these desks.

Can someone explain how and why that is the case and how they are different. If someone can also explain the various desks available and how the job and skill level varies between each desk, nothing like that. And some talk about the money wont hurt.

2. Would sales guys also have a different lives in different desks or will they be just selling different things, but basically the same way?

3. I understand that the I Banks are called sell side firms. What kind of career path do the traders have after 2-3 yrs in trading with these firms. I heard that they try shifting to buy side firms. Can someone discuss more on this. Why the shift happens? Is it coz money is higher. Are all asset management firms, buy side firms? Are hedge funds one type of asset management firm. If they are one type, are there various types even in asset management similar to the various desks in trading.

4. How easy is it to shift tracks within desks. Say today I trade equities and then shift to commodities etc. Is it very different or is it all one and the same kinda job profile.

5. If I want to be safe and join a desk which will open more career options later on, which one is better?

These kinda answers, I could not find much from various websites. All websites talk about lot of money, lot of pressure etc in I banking world. But not much into the details of job profiles. The websites discuss about I Banking and Sales & Trading in general. Not about the individual desks.

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21 Oct 2007, 05:55

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I don't know a whole lot about this stuff but I'll take a stab at it.

SALES AND TRADING -- The sales guys and the traders work closely together. The sales guys are typically strong with soft-skills, so they can entertain clients and do the smooth talking, while the traders are more quant-oriented, although many traders insist a monkey could do their job.

95% of people who call themselves traders are "market-makers," nothing too glamorous, you're just following a strategy set by the bank, and you manage your inventory buying and selling securities all day making a profit on the spread.

The other 5% are proprietary traders. These are basically speculators, people who are trusted by the bank to turn buckets of cash into more buckets of cash. These jobs are hard to come by, so much so that it's probably not realistic to think you can land one of these jobs without first working as a marketmaker.

ASSET MANAGEMENT

Sell-side means you're working for a bank that is trying to sell securities to people/institutions. The sell-side equity analysts analyze equities and find a way to say, "This is a great stock." Obviously there's no conflict of interest here, it's like when a used car salesman gives you his objective opinion on how great his '84 Pinto is, he's really just being straightforward and honest.

Buy-side means you work for an institution that is not selling, but purchasing for the purpose of investing. So a hedge fund or a mutual fund management company like Fidelity. The difference here is that rather than analyzing equities (or bonds or whatever) and cranking out reports that say how awesome these instruments are, you are interested in finding out what's really going on because your job is to get the biggest returns possible with a set amount of risk, so you want to know everything about your investments possible.

So the big difference between sell-side and buy-side is that the purpose of your analysis is different. I think generally speaking compensation is roughly equivalent when you start out, but as you move up it's probably better to be working buy-side. It's also thought of as more prestigious because everyone wants to work at hedge funds and have the opportunity to switch jobs within an organization like that.

So like I said, this is just my cursory understanding of this stuff, no doubt there are better explanations out there.

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A lot of good questions there, and a lot of "it depends" as the correct answer. I am in the middle of all this, and this appears the best practice:

I would say this is the way it goes:

If you recruit for desks, you recruit for desks the bank tells you that you are suited to. Just because you are on an MBA course and think you know what you should do, in reality you know the square root of **** all compared to the recruiters.

So, you roll with it. You research everything so you can run with it, and you "yes sir, three bags full sir" the situation. Because they know a lot better than you do. Expressing a clear opinion of where your career should go is an awesome way to go about getting a ding. Like the guy who went all fixed income on BNP Paribas ass to find out they only had equities positions.

There are fewer jobs out there than people wanting them. If you end up with a seat at a desk you wanted at the outset, you go with it. But you definitely don't want to try and filter any company out yourself - it can be a very costly way of doing things. A lot of it is social and ideological - I would prefer a desk I didn't previously entertain at X rather than the one I wanted at Y. There is a lot a play.

As for moving, some firms you can, some firms it is more difficult. Equities to Commodities is pretty unlikely, but by no means impossible. There is a bit of a cultural split between Commodities, FI, and Equities.

Researchers prefer the move buy side, traders vary on their mood on that.

Career progression in three years varies. If you do well you will be a VP, if you suck you will be unemployed.

What desk to join? The only thing I can say in that is never join the hot desk. Mortgages was hot a few years ago. Those guys probably aren't getting paid next month. Unfortunately the answer to most of yr questions is that if we knew them, we would be very rich indeed.

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23 Oct 2007, 09:11

3underscore wrote:

Expressing a clear opinion of where your career should go is an awesome way to go about getting a ding. Like the guy who went all fixed income on BNP Paribas ass to find out they only had equities positions.

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Underscore is spot on in his views.As an ex commodities trader I can tell you there are cultural differences between securities and commodities.

You'll find very few "Cult traders" in commodities.

Plus very few people ever leave trading.Though most of them are burnouts by the time they turn 45..........Just the stress the job brings with it.

I plan to get back to commodities after my MBA.

Lets see what happens.

One doubt ashish. In Trading, if one joins as an associate, I understand that his entire day will be trying to trade stocks/other stuff, discuss with sales guys etc. But once you progress to a VP or someone up higher, how does the responsibility change?

In M&A, I understand the VP's are more into developing client relationships, attending road shows and during a deal, the financial modeling work is thrown at associates who pass on the dirtier work to analysts.

What does a VP do in Trading? the question basically is:

If he is not into the trading desk, then his work must be better and less stressful (since associates are the ones in action). If he is into the trading desk, why is he a Vice President!

Or is it the VP has larger amounts of money at disposal whereas the job profile is still the same?

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23 Oct 2007, 13:33

Hi! Rpradeep,

Well there are a variety of roles one plays in trading....

I don't know of equities & securities, but I can tell you about Commodities.

In commodities, you are either a trader (Which can be any level from mid-management to senior management).As sa trader, your responsibilities will include Managing your hedges (to put it very simply).These hedges will result from the physical trades you do.

Lets take an example : If you buy you buy a barrel of oil on the physical market, you will sell a barrel on the NYMEX.Your physical trades will drive your hedges and the complexity of the commodity will drive your trades further. (One barrel of crude will yield some gasoline, jet kero, naptha etc).

As a commodities VP (Senior trader) you will have a few guys reporting to you.they will be managing the physical operations and hedges based on those.As a VP you can either be a commodity specialist (I had a VP who only traded Copper) or a market specialist (Only NYMEX or NYBOT).

Re: Investment banking/Trading jobs - description and some help [#permalink]

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24 Apr 2008, 22:33

Dear all,

First of all, accept my apologizes for coming this old post up again.

Then, I guess if a MBA is really useful in a trading desk, instead the CFA certificate, or similar.

I work in the treasury of an European bank, although neither in a trading desk nor sales desk. When I decided to apply for a MBA I ask for my colleagues and all of them thought the same: a MBA program is not as useful as CFA certificate is.

(Remark: after that I was sure to do a MBA, just in order to maintain myself away from IB)

Now, what I see every day: traders are always in front of their computers (5 and sometimes 6 screens, 2 or 3 keyboards…), looking how graphics and numbers are moving up or down. Sales, the same, except that some days are traveling in order to visit their customers (When I say some days, I mean 2 or 3, no more).

My experience in my second attempthttp://gmatclub.com/forum/p544312#p544312My experience in my third attempthttp://gmatclub.com/forum/630-q-47-v-28-engineer-non-native-speaker-my-experience-78215.html#p588275

Re: Investment banking/Trading jobs - description and some help [#permalink]

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07 May 2008, 04:30

Hi, I am planning to get into IB.I am applying for an MBA/Msc in international business in Malaspina University College.Although,they do not have a specialization in finance,I wonder if it is puts me in a good position for IB/Finance jobs after graduation.Please, I want to get more info on Finance/Investment banking industry.Also what does a CFA do for one as compared to an MBA program?

Re: Investment banking/Trading jobs - description and some help [#permalink]

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07 May 2008, 06:52

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snow wolf wrote:

Hi, I am planning to get into IB.I am applying for an MBA/Msc in international business in Malaspina University College.Although,they do not have a specialization in finance,I wonder if it is puts me in a good position for IB/Finance jobs after graduation.Please, I want to get more info on Finance/Investment banking industry.Also what does a CFA do for one as compared to an MBA program?

I have never heard of Malaspina so I can't offer any specific advice. I can tell you that by and large, most investment banks recruit at a very limited number of schools, top 15 perhaps top 25 in some cases. What you need to do is to find out if banks you are interested in recruit on campus at your school. If they do recruit on campus (in reasonable numbers) then you will have a legitimate shot if you can beat out your fellow students. If they do not recruit on campus (including if they do resume drops or welcome you to regional events) then your shots of landing a job are extremely slim. In fact, if they don't recruit on campus at your school, your success in landing a job will largely depend on your experience prior to business school. Keep in mind that there are finance jobs beyond investment banking.

A CFA is useful for investment management and private wealth, but is not useful for investment banking other than as an ornament.

Re: Investment banking/Trading jobs - description and some help [#permalink]

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07 May 2008, 07:36

Thanks ,pelihu.Although your answer stirred a hornet's nest in my head,I am glad I got a response.What is important to get for investment banking since CFA does not cut it.Maybe you could get a look at Malaspina at mala.ca and tell me what you think.After GMAT I found out that this forum represents the best use of information possible(1st GMAT=380 post, gmatclub & 3rd attempt =620,not fantastic pot an encouraging improvement) .Thanks again.

Re: Investment banking/Trading jobs - description and some help [#permalink]

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30 Dec 2012, 12:12

There's a much wider array of jobs in an investment bank than just M&A and S&T. ECM, DCM, underwriting, equity /debt research, LevFin, not to mention dozens of industry coverage groups just to name a few.